Krugman is Good Again
Krugman’s latest op-ed brings back fond memories of the thinker he used to be. As David Henderson points out, Krugman plainly admits that insurance regulation makes the adverse selection problem worse:
Suppose, for example, that Congress took the advice of those who want
to ban insurance discrimination on the basis of medical history, and
stopped there. What would happen next? The answer, as any health care
economist will tell you, is that if Congress didn’t simultaneously
require that healthy people buy insurance, there would be a “death
spiral”: healthier Americans would choose not to buy insurance, leading
to high premiums for those who remain, driving out more people, and so
What makes me truly happy, though, is that Krugman is done playing populist – and back to pointing out the unintended negative consequences of feel-good policies:
You would, rightly, ridicule anyone who proposed saving money by
leaving off one or two of the legs. Well, those who propose doing only
the popular pieces of health care reform deserve the same kind of
[R]eaching out to Republicans won’t work, and neither will trying to pass only the crowd-pleasing pieces of reform.
Of course, Krugman still won’t face up to the possibility that if the public recognized all the hidden drawbacks of the “crowd-pleasing pieces of reform,” they would cease to be crowd-pleasing. But I’m not asking for miracles. As long as Krugman goes back to bluntly pointing out the many conflicts between liberal goals and liberal policies, I’ll count myself and the world lucky.
Jan 22 2010 at 1:54pm
How is this a new thing? I think he just made an obvious point about adverse selection that you agree with. You’re smitten because he said something you agree with again. There’s nothing especially new about what he wrote in this article.
Jan 22 2010 at 2:18pm
Of course there is yet another way to accomplish the “crowd-pleasing pieces of reform.” Read this:
For reasons explained well by Krugman in his column yesterday, it isn’t possible to pare down or chop up health care reform and still end up with something that will hang together (read it if you don’t get why). Yet something that seems smaller is precisely what frightened Democrats seem to be casting about for. Small, incremental changes to existing programs and law is one way to go, but they won’t do much to address the big coverage and cost problems we face.
But there’s another way. It’s politically sneaky and it relies on the fact that Americans mostly don’t understand how CBO scores bills. Health reform seems big in part because of its price, on the order of $900 billion. That’s the cost over ten years, which is what CBO estimates in its budget analysis of bills. The idea is to bring that cost down by slowing down implementation of reforms and a few other tweaks.
By delaying implementation of exchanges (and the individual mandate and subsidies that go with them) the 10-year price would come down. It would also come down if more folks are covered by Medicaid. So another tweak is to use the House’s cutoff (or higher) for eligibility for that program. Maybe there are a few other ways to nibble at the edges of things to cut a few billion here and there. Suppose doing all this brought the ten-year cost down to, I don’t know, $750 billion. All this could be done under the budget reconciliation process, requiring only 51 votes in the Senate, provided the House passes the Senate bill, as many experts are urging.
So, here’s the Democrats’ message to America:
We heard you. You want something smaller that doesn’t change things too quickly. We can get that done for you. We can do it soon. We have a brand new approach to health reform that is cheaper for taxpayers. It will achieve the goals you sent us here to accomplish, but cost far less.
You can’t expect Democrats not to spin this as new because that’s what they are seeking. But, really, the only way to achieve what they set out to do is to pass the Senate bill, and the only way to make it seem new and different is to tinker with it under reconciliation. If they can get it to actually cost a lot less (over the next 10 years) and move a bit more slowly, they can satisfy the necessities of both politics and and policy. Right now I don’t see any other way to do that.
Patrick R. Sullivan
Jan 22 2010 at 3:19pm
It’s the same old Krugman, for instance:
Ha ha ha ha….
Jan 22 2010 at 3:29pm
politics is supposed to be about achieving something more than your own re-election.
Ha ha ha ha….
Yes, and being employed is supposed to be about more than extracting the most amount of money from your employer for the least amount of work.
Ha ha ha?
Actually, no. Most people I know do their job responsibly and ethically. They are indeed concerned about themselves, but not to the exclusion of their responsibilities to their employer.
Why the assumption that our elected officials are any different?
Jan 22 2010 at 4:55pm
Because of the large body of evidence that suggests otherwise. Elected officials must continually work for another term. There are vastly different incentives in the public sphere than in the private one.
Check out the work James Buchanan and Gordon Tullock have done in public choice.
Jan 22 2010 at 7:36pm
> What makes me truly happy, though, is that Krugman is done playing populist
So strange that you would think this. He is serving the interests of the Obama administration, which in this case means getting an unpopular bill passed.
I don’t agree that the article is particularly anti-populist. But if you think so, why do you think it represents a change in heart rather than just the most reasonable sounding arguments he could find to get the health care bill passed?
> As long as Krugman goes back to bluntly pointing out the many conflicts between liberal goals and liberal policies,
So you expect Krugman will start saying things critical of the Obama administration? Presenting arguments that their policies are not workable and should not be enacted?
I wouldn’t hold your breath.
Jan 22 2010 at 8:17pm
This shows that pundits’ pronouncements respond to, rather than drive, the views of the voters. Once an anti-universal-healthcare guy gets the majority of votes in Massachusetts, all of the sudden Krugman is good again.
As with public policy, so with mass-market punditry: it is only as beautiful or deformed as what is demanded by the rude vulgar of mankind.
Jan 23 2010 at 10:20pm
He may be anti-Obamacare, but he isn’t anti-UHC (he supported Romneycare as a state senator). Basically, he ran on a campaign of “going to Washington and showing Obama how it’s done right.”
Jan 24 2010 at 5:31pm
The rule seems to be if Krugman makes bashes something Caplan doesn’t like (protectionists, or in this case those who want ‘one leg’ of health reform), he’s a great thinker. If he says something Caplan does like….why then Krugman is mean and partisan and just ohhh really really bad.
If more economists had boobs instead of acting like boobs Bravo could work up a “Housewives of Economics” show.
Jan 26 2010 at 11:26am
@Boonton: Perhaps Caplan’s likes and dislikes of Krugman is based on a positive evaluation of Kurgman’s ideas as ones that are impractical. Obviously, he respects him as a thinker, so he tries to explain his impractical ideas as merely normative economic thought rather than the alternative that Krugman has gone daft.
Instead of trvializing other peoples’ views, perhaps you should post some of your own and see how they withstand the test of mass criticism. You just might be a ‘boob’ yourself.
Jan 26 2010 at 1:47pm
Actually my view is that the economics profession has a lot of cattiness to it (not unlike an episode of ‘Housewives of…’. There’s a lot of jealousy of Krugman who enjoys both a Nobel and a high profile spot as NYT columnist (there’s not that many ‘Economics columnist’ slots out there in the mass media and often economists have to bump elbows with the more clownish types like Ben Stein or Jim Cramer) and that accounts for a lot of Krugman nit picking that goes above and beyond simple ideological or theoretical disagreement.
For example, all this pining for the thinker “Krugman used to be”…. I’ve read Krugman making this ‘new’ point at least half a dozen times over the last year….I suspect he even made it before the election when candidate Obama was attacking candidate Clinton for having a mandate as part of her plan. What I hear is someone who stopped paying attention to Krugman long ago, which is your right of course but it would be pretty silly to assume that normal human emotions aren’t at work here….that economists are a class of super enlightened entities who have transcended all selfishness and pettiness!
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